Amazon “Edge Services” – Digital Manufacturing

When is a web service not a web service? When it’s an edge service, maybe?

Last night I was pondering the Amazon proposition, which at first glance broadly seems to break down into:

The retail bit splits down further: physical goods and digital downloads, shipped by Amazon; and marketplace goods, where products from other retailers are listed (using Amazon ecommerce webservices, I guess) and Amazon takes a cut from each sale.

It was while I was looking at the digital downloads that the idea of “edge services” came to mind – web services that result in physical world actions (if you’re familiar with the Terminator movies, think: “Skynet manufacturing”;-) [It seems an appropriate phrase has already been coined: direct digital manufacturing, (DDM) – “the process of going directly from an electronic digital representation of a part to the final product [for example] via additive manufacturing”. See also “Digital Manufacturing — Bridging Imagination and Manufacturing“.]

But first let’s set the scene: just what is Amazon up to in the digital download space?

Quite a lot, as it happens – here’s what they offer directly under the Amazon brand, for example (on the Amazon.com domain):
Amazon MP3 Downloads store, a DRM free music downloads site;
Amazon Video on Demand Store – for movie and TV downloads;
Amazon e-books and docs – download e-books and electronic documents (“eDocs”);
– the Kindle store. If you haven’t heard about it already, Kindle is Amazon’s consumer electronics play, an e-book reader with wi-fi connectivity and a direct line back to the Amazon store;
– and just this week (and what prompted this post initially), Amazon bought up Reflexive, a company that among other things is into the online game distribution business.

And although it doesn’t quite fit into the “digital download” space, don’t forget the person-in-the-machine product Amazon Mechanical Turk, a web service for farming out piece work to real people.

But that’s not all – here, for example, are the companies that I know about that are in the Amazon Group of Companies:
IMDb – The Internet Movie Database (which apparently is now streaming movies and TV programmes for free);
Audible – audio book downloads;
Booksurge – book printing on-demand (just by-the-by, in the UK, Amazon’s Milton Keynes fulfilment centre is about to go into the PoD business (press release);
CreateSpace: PoD plus, I guess? Create print on demand books DVDs and CDs, backed up by online audio and video distribution services.

(Amazon also own Shelfari, a site for users to organise and manage their own online bookshelves, and have a stake in LibraryThing, another service in the same vein, through the acquisition of second-hand, rare and out-of-print book retailer Abebooks.)

UPDATE: And they’ve just bought the Stanza e-book reader.

So here’s where it struck me: Amazon is increasingly capable of turning digital bits into physical stuff. This is good for warehousing, of course – the inventory in a PoD driven distribution service is blanks, not one or two copies of as many long tail books you can fit in the warehouse – though of course the actual process of PoD is possibly a huge bottleneck. And it takes Amazon from retailer, to manufacturer? Or to a retailer with an infinite inventory?

If this is part of the game plan, then maybe we can expect Amazon to buy up the following companies (or companies like them) over the next few months:
MOO.com – personalised business card printing, that’s also moving into more general card printing. Upload your photos (or import them from services like flickr) and then print ’em out… photobox does something similar, though it maybe prints onto a wider range of products than MOO currently does?
Spreadshirt – design (and sell) your own printed T-shirts;
Ponoko, or Shapeways – upload your CAD plans and let their 3D printers go to work fabricating your design;
Partybeans – personalised “candy boxes”. Put your own image on a tin containing your favourite sweets:-)

(For a few more ideas, see Money on Demand: New Revenue Streams for Online Content Publishers.)

That said, Amazon built up it’s retail operation based on reviews and recommendations (“people who bought this, also bought that”). The recommendation engine was (is) one way of surfacing long tail products to potential purchasers. And I’m not convinced that the long tail rec engine will necessarily work on ‘user-generated’ content (although maybe it will scale across to that?!). But if you run an inventoryless operation, then does it matter?! Because maybe you can resell uploaded, user-contributed content to friends and family anyway, and several sales for the price of one upload that way?

Or maybe they’ll move into franchising POD and fab machines, and scale-up manufacturing that way? One thing I keep noticing at conferences and events is that coffee increasingly comes in Starbucks labeled dispensers (Starbucks – For Business). So maybe we’ll start seeing Amazon branded POD and fab machines in our libraries, bookstores and catalogue shops? (Espresso, anyone? Blackwell brews up Espresso: “Blackwell is introducing an on-demand printer the Espresso Book Machine to its 60-store chain after signing an agreement with US owner On Demand Books.“) Also on the coffee front – brand your latte

A few further thoughts:
– if Amazon is deliberately developing a digital manufacturing capacity to supplement it’s retail operation (and find ways of reducing stock levels of “instanced products” (i.e. particular books, or particular DVDs) then is the next step moving into the design and user-contributed content business? Like photo-sharing, or video editing..? How’s the Yahoo share price today, I wonder?! ;-)
– Amazon starts (privacy restrictions allowing, and if it doesn’t already do so) to use services like Shelfari and IMDb (though its playlists) to feed its recommendation engine, and encourages the growth of consumer curated playlists; will it have another go at pushing the Your Media Library service, or will it happily exploit verticals like IMDb and Shelfari?
– will companies running on Amazon webservices that are offering “edge services” start to become acquisition targets? After all, if they’re already running on Amazon infrastructure, that makes integration easier, right? Because the Amazon website itself is built on top of those services (and is itself actually a presentation layer for lots of loosely coupled web services already?) (And if you go into conspiracy mode, was the long term plan always to use Amazon webservices as a way of fostering external business innovation that might then be bought up and rolled up into Amazon itself?!)

There’s a book in there somewhere, I think?!

21 comments

  1. Pingback: Looking Up Alternative Copies of a Book on Amazon, via ThingISBN « OUseful.Info, the blog…
  2. sivam

    Digital Printing is still in its very early days. Equivalent of the pacman days of computer graphics. There are only a few companies namely figureprints, shapeways and jujups in the consumer space doing 3D printing. This will change in the next few years with more players, cheaper and better printers and more interesting range of 3d printed products.

  3. Sarah Currier

    I was reading a bit around Amazon when gaygate was all over teh interwebs (which I haven’t forgiven or forgotten) and came across this disturbing story about how Amazon treats its customers. Don’t return anything faulty folks, or you will also lose everything else you’ve subscribed to via Amazon. This is perhaps an example of ‘power corrupts, a monopoly corrupts absolutely’:
    http://www.mobileread.com/forums/showthread.php?t=44350

    I hope they don’t by moo.com! I love moo.com.

  4. Tony Hirst

    See also:

    Amazon’s Wheel of Growth [ http://seekingalpha.com/article/121955-amazon-s-wheel-of-growth ]

    “At the center you have the fly-wheel of growth. Growth goes faster when more consumers (traffic in the diagram) come to the site. Consumers come to the site for three things – selection, value and customer experience. By partnering with high-quality sellers, Amazon is able to drive selection at a good level of customer service, increase value, which in turn, drives growth. Traffic brings sellers, and the wheel goes around faster and faster. As the wheel turns, Amazon is able to benefit from a lower cost structure which is passed on to consumers in the form of lower prices, and THAT also accelerates the wheel.”

  5. Tony Hirst

    Amazon Simple Notification Services adds the capability to turn web bits into SMS bits: http://aws.typepad.com/aws/2011/11/amazon-simple-notification-service-now-supports-sms.html

    I also notice I haven’t added any links to this post about the Kindle ebook reader, or Fire tablet (a combined catalogue/player… Puts me in mind of the Argos catalogue, and makes me think of a day when I’ll choose something from that sort of catalogue, pay for the bits to be converted to atoms, and then either collect it or have it delivered).